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USDA sends schools $1.5 billion to relieve student lunch crunch

"These extra funds will definitely help alleviate that budgetary pain point and hopefully give many districts more options to find alternative sources of food for kids."

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The U.S. Department of Agriculture is sending $1.5 billion to schools struggling to serve students healthy lunches as supply chain disruptions lead to continued food shortages, delivery delays and higher costs.

School districts across the country are facing extraordinary challenges in feeding students, many of whom are returning to the classroom this fall after nearly 18 months of virtual and hybrid learning.

"We're hearing from members that there is a rapid escalation in costs," said Diane Pratt-Heavner, director of media relations at the School Nutrition Association, a nonprofit representing more than 50,000 school nutrition professionals.

About 97% of school meal program directors the group surveyed said they were concerned about continued supply chain disruptions. Some schools have been forced to make last-minute menu changes — often paying a higher price as a result — after finding out the distributor has run out of what they ordered.

The new federal funding for schools is part of a larger $3 billion investment that the Department of Agriculture is making that will mostly help farmers and ranchers address the challenges posed by recent drought, animal disease and market disruptions.

The agency will send the $1.5 billion allocated for school meal programs to states. States are allowed to use about $500 million to buy food directly for those programs. The remaining $1 billion will be distributed to schools themselves to choose what food to buy.

The infusion should help ease some of the strain schools are facing in providing meals, said Lisa Davis, senior vice president of Share Our Strength's No Kid Hungry campaign.

"These extra funds will definitely help alleviate that budgetary pain point and hopefully give many districts more options to find alternative sources of food for kids," she said.

However, another challenge schools are facing is a lack of personnel to serve the meals, she said. It's difficult for districts to raise salaries or providing hiring bonuses, leaving them at a disadvantage when it comes to competing with restaurants and other businesses for already-scarce employees.

Increasing flexibility for school meals

Earlier this month, the Department of Agriculture moved to ensure that school districts would not face financial penalties if they can't meet all the procurement, distribution and nutrition standards set by the federal government.

The USDA said it will grant waivers to states experiencing COVID-19-related supply chain disruptions that affect their ability to serve meals — including unanticipated cancellations of contracts and unexpected substitutions of foods by suppliers. It will not require states to take fiscal action for missing food or production records or for repeat violations involving milk and vegetable requirements.

The agency also urged states not to take action for repeat violations of the requirements for food quantities and whole grain-rich foods, as well as for violations of the dietary specifications for calories, saturated fat, sodium and trans fat. But states should also consider other options, such as emergency noncompetitive procurement contracts, purchasing cooperatively or buying smaller quantities through multiple local producers or small businesses, the agency said.

Acknowledging that the cost of meals has increased because of the public health emergency, the USDA also announced it would reimburse schools at a higher rate for the 2021-22 school year. The free and reduced-price school meal program typically serves 30 million children.

Since the start of the pandemic, the agency has provided states and school districts with multiple waivers to make it easier for them to continue providing meals to children even when schools were fully or partially closed.

It allowed parents to pick up meals and bring them home to their children and permitted meals to be served in non-group settings to allow for social distancing. It also let meals to be served outside of traditional times to make it easier for families to pick them up.

And, as part of a March 2020 relief package, Congress created the Pandemic-EBT program, which provided low-income families with funds to replace the meals their children would have received in school. The Biden administration also expanded a coronavirus aid program to feed children over the summer.

Even with those waivers, it was a big challenge for schools to get meals from students learning from home. In the first full year of the pandemic, schools served 2.2 billion fewer meals compared to the prior year. That meant less federal revenue, putting school meal programs in a tight spot financially even before this year started. More than half reported a financial loss during the 2019-2020 school year, according to a School Nutrition Association survey.